Credit management is the process of managing a business creditworthiness, identifying risks associated with extending credit, evaluating their potential for loss, and strategically guarding against late or non-payments by customers. A good credit management process can help a business to minimize the risk of bad debt and protect its cash flow. Experts agreed that each individual business needs a credit management plan tailored to its needs, sector and customers.

Here are a few tips for setting up a good credit management process:

1. Establish credit policies and procedures: Develop a clear set of guidelines that outline the credit policies and procedures for your business. This credit management policy should include information on credit limits, payment terms, contract conditions and costs associated with late payments and the process for credit applications and approvals.
2. Assess creditworthiness: It’s important to collect insightful information to properly evaluate and track the creditworthiness of your potential customers before granting credit. This can be done by running a credit check and reviewing their payment history, financial statements to estimate their solvency in the short and medium term, and other relevant details r to assess their ability to pay on time.
3. Set credit limits: Once you have assessed a customer's creditworthiness, set a credit limit that is appropriate for their financial situation. This is the maximum amount that will be indemnified if that insured customer fails to pay. Credit limit will help you to manage the risk of bad debt and ensure that you're not overexposing your business to financial risk. As economic parameters change, credit limits may be adjusted as a normal part of the credit-monitoring process.
4. Monitor credit accounts: Regularly analyse and monitor your customers' credit accounts to ensure that they are paying on time and within their credit limits and payment conditions. Not all customers pay their invoice within the agreed period, so in the event of late payments, take action immediately to try and rectify the situation.
5. Communicate with customers: Establish good communication with your customers to help manage their credit accounts. This can include sending regular statements, following up with a written reminder of upcoming payments, and working together to resolve any issues that may arise in order to preserve your customer relationship.
6. Be proactive: Create proactive credit risk mitigation plan, by taking into account economic trends, industry changes, and customer behaviour to anticipate problems before they occur.
7. Review and adjust: Be sure to review and adjust your credit management process on a regular basis to ensure that it is working effectively. This can include analyzing credit risk data, evaluating the performance of your credit management team, and making changes if necessary.

By following these tips, you can set up a good credit management process that will help to mitigate the risk of bad debt, improve cash flow and increase your customer satisfaction. As you put these practices into use, keep in mind that credit management is an ongoing process and requires ongoing attention and review.